Solar in the land of the rising sun

Impressions from Solarplaza's Solar Asset Management Asia conference

The future is bright for Japan's solar market. With already over 20GW of solar PV installed, it is a market equal to the size of the entire United States. Japan's generous feed-in-tariff scheme helped to kick-start the market: over 85GW have been approved under this scheme.

But because solar panel prices kept falling, many developers held off further development to try to secure higher margins. This has messed up the government's plans for a speedy introduction of renewables into the energy mix post-Fukushima. The government is now taking bold steps to address this: they plan to revoke the application for plants under the Feed-in-Tariff scheme which have not applied for interconnection by April next year. This should add steam to the market: Bloomberg New Energy Finance expects new installations to the tune of another 30GW until the end of 2018.

This buzz was clearly felt at Solarplaza's Solar Asset Management conference in Tokyo last week. About 200 attendees from Japan and across the globe gathered to hear about the latest trends and insights in solar asset management and O&M.

A typhoon easily rips out solar panels and twirls them around in the air

Japan has some unique opportunities and challenges when it comes to installing solar PV. Weather conditions can be unfriendly to solar. As avid skiers know, Japan is famous for its fluffy white. Many developers proclaimed that they would not even think of touching projects in snowfall areas. But a more unpredictable challenge are typhoons. If the plant is not built by a solid EPC, a typhoon can easily rip the panels out of the array and twirl them around in the air at its own content. This can not only do physical damage to structures, but can also be very dangerous to people and livestock. This is one of the reasons why the government is insisting on tougher operations and maintenance requirements.

Are you thinking that some countries have a challenge because the transmission grids are not well interconnected? What if you are a collection of islands with 10 different utilities? Effectively each island is its own grid. This means that if you are rapidly introducing intermittent energy resources, the utilities will not be happy campers. Therefore the government now stipulates that the utilities have the ability to curtail. For some plants the maximum curtailment is 30 days and for others the government will allow unlimited curtailment. This may solve grid balancing issues, but in turn it has the bankers work overtime to find a financeable solution.

Unlimited curtailment may solve grid balancing issues, but has the bankers work overtime
Shares in Japan’s first solar investment fund were up by 45% on the first day of trading

The conference coincided with the eagerly awaited first day of trading of the first solar investment fund on the Tokyo Stock Exchange. There were cheers and applause when Japanese real estate firm Takara Leben announced that its solar fund was up by 45% on the first day of trading. This display of investor confidence is great for the industry: expect many other IPO filings to follow soon.

Can you believe that there are plants without monitoring systems in Japan?

The audience asked if I can believe that there are plants in Japan without monitoring systems. Yes, I can believe it. As in many emergent markets, PV monitoring systems are still seen as a luxury by some players. But professional investors will expect a professional approach to solar asset management. This includes diligent service providers and tools and systems to safeguard their investment. Japan is in a lucky position to learn from the mistakes made in other markets that started earlier. My bet is that this will accelerate the speed at which the market matures. I can't wait to return to next year's event to see the change!